Contract Officer

Factoring for government contractors is fairly common. Considering that factoring companies rely on the creditworthiness of the account debtor (customer) it makes the approval process certain. The factor does not have to worry other than to insure the particular Agency has a funded budget in place. We have seen situations where an Agency is trying to push through a contract prior to actually having an approved budget. These are usually situations where an existing contract is overlapping a fiscal year.

From our standpoint, we offer the government contracting firm the ability to aggressively go after more awards knowing that we stand behind them, ready to supply the necessary working capital to perform on a contract. Not only that, we will supply a letter to be included in a solicitation application. It states that your company has already secured the available credit in order to fulfill the requirements.

Once you have been awarded a contract, the CO will sign off on milestones or time sheets and the invoice is submitted. The advance we wire into your bank account which is used usually to pay labor and payroll taxes etc. With ongoing contracts this process will not disrupt the daily operations.

Factoring as a tool for government contractors is best used when the contracts are getting larger and coming in overlapping waves. The worst decision a contracting company can make is to go it alone and get behind on their 941 payroll tax obligations. The door to capital starts slowly closing until it is shut completely leaving you in the dark.

There is a lot of attention on government contractors who are factoring their invoices for cashflow. Due to major goings on around the planet the U.S. government is buying goods and services at a record rate. Many new and young start-ups are taking advantage of the various requests that need to be fulfilled. But with bigger contracts some cash constrictions. Whether providing a product or service, these contracts eat up a lot of money, quickly.

When contacting a factoring company to help with a new government contract be aware of the NOTICE OF ASSIGNMENT. If you are the PRIME contractor (billing the government directly) and have an FAR (Federal Acquisition Regulation) contract then you need to have the contract amended to put the NOS in place. Contract regulations require that in order for payments to be made to a third party – the lender, there must be an assignment in place that sets the proceeds of the contract to that third party.

Now this is regular paperwork and all banks and lenders prepare them, but you should let your contract officer know right away that your plans will involve getting outside financing. The contract officer has to sign off (they always do) and by giving them a heads up you won’t get bogged down waiting for the NOS to go through proper channels. We are currently funding a contractor who is shipping goods over to a country far away that is getting much attention these days. Trying to get a government employee who is more worried about staying alive than signing some paperwork has been a real challenge!

So if you’re getting into the government contracting game, remember the Notice of Assignment, and put it into play as soon as possible.

Flexibility, reliability, and dedication are the main ingredients to pursue when considering a source for your financing. Look no further than the steady growth and dependable service CCA provides all our clients. Click here to learn more.